Securities council examining appointment of new CEO by GBTI

Larry Nath

 

The appointment of Trinidadian Larry Nath as Chief Executive Officer (CEO) of the Guyana Bank for Trade and Industry (GBTI) has been greeted by an investigation from the  Guyana Securities Council (GSC).

Shaun Allicock, Legal Counsel and Corporate Secretary of the Council, explained to Stabroek News on Thursday that complaints have been received and the council is looking into the entire situation.

Asked about the nature of the complaints received, Allicock said he could not say. Asked if the complaints were received from members of the general public or from members of the financial fraternity Allicock noted that they were not received from the financial fraternity.

Asked if the concerns centred around Nath himself or the process used to identify and appoint him CEO, Allicock said “we are looking to see what process was followed.”

“The only thing we can say at this time is that we have received complaints and are looking into it,” he reiterated.

As a publicly traded company GBTI is a reporting issuer registered with the council and subject to its supervision. The Guyana Securities Council is authorized under the Securities Industry Act 1998 (SIA) to among other things register, authorise or regulate securities issuers such as GBTI. They are also empowered to control and supervise their activities with a view to maintaining proper standards of conduct and professionalism in the securities business.

Section 58 of the SIA specifically notes that “where a material change occurs in the affairs of the issuer the reporting issuer shall as soon as practicable but…no later than seven days after the change occurs file with the council and issue a press release authorized by a senior officer that discloses the nature and substance of the change.”

Unusually, though Nath has held the position since at least December 12th, 2017  there has been no public announcement of his appointment by the bank. Public Relations Officer of GBTI, Pamela Binda when contacted by Stabroek News on December 15th said that GBTI is not willing at this time to state when Nath was appointed or reveal any details related to his appointment even though he had appeared publicly in his new post.

Additionally Stabroek News understands that the Bank of Guyana is also concerned about the process used in Nath’s appointment.

As a licensed financial institution (LFI) GBTI is subject to the regulatory powers of the Central Bank.

Under the authority of part II of the 1995 Financial Institutions Act, the Bank of Guyana when evaluating an application to conduct banking or financial business shall consider several criteria including the qualifications of Controlling Shareholders, Directors, Officers, and Officials.

Specifically the Bank must be convinced that the applicant satisfies the “fit and proper” criteria by evaluating the personal history, business or employment records, experience, and other background information of all controlling shareholders, directors, officers, and officials. The qualifications of these persons should be at a level which will enable them to conduct business competently and competitively with existing financial institutions.

Nath who previously served as Chief Executive of First Citizens Bank in his home country resigned from the post in 2014.

A report from the Trinidad Express at that time explained that Nath joined the bank in 2011 as deputy chief executive officer, Banking Operations, and took over the position of Group CEO in 2012 after his predecessor Larry Howai was made Minister of Finance and the Economy.

His resignation also came in the middle of an investigation into allegations of insider trading, made against the bank’s then Chief Risk Officer Philip Rahaman.

Various media houses in the twin-island republic have reported that a 2013 Initial Public Offering (IPO) of shares in First Citizen developed into a scandal when $14 million in shares were bought by Rahaman.

It is alleged that the officer used his insider position to buy 659,588 shares from the under-subscribed employee bucket, through a relative at a brokerage company.

This scandal reportedly also affected an additional public offering (APO) from the company. According to a report from the Trinidad Express applications to buy First Citizens bank shares fell from 12,435 at the time of its IPO in 2013, to ‘over 4,000’ this year in the additional public which ended April 7. This announcement was made at the bank’s annual general meeting (AGM) by First Citizens Group CEO Karen Darbasie.

Darbasie was also asked about a PricewaterhouseCoopers report on the scandal surrounding the IPO. Asked for her take on whether it was wise to proceed with the APO while the IPO scandal remained unresolved, she reportedly said, “I think the shareholder answered that in his response in Parliament. The investigation is not something that First Citizens is involved in. That was a matter with our regulator and we continue to run the bank and to do the bank’s everyday business.”

According to Parliamentary exchanges on the matter the report had been submitted to the Director of Public Prosecutions  in Trinidad for review after which the then Attorney General advised that the report could not  be tabled or publicly and widely shared until the investigation was completed.

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